COSTA RICA NEWSPAPER: U.S. legislation would crimp online gaming here

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U.S. legislation would crimp online gaming here

By the A.M. Costa Rica staff
Three pieces of legislation are pending in the U.S. Congress that would reshape Internet gambling, a major employer in Costa Rica.

Two of the measures, one in the U.S. Senate and one in the U.S. House, would prevent the use of credit cards and other methods for payment of gambling wagers.

The House bill, introduced in January by Rep. James A. Leach (an Iowa Republican) with 35 co-sponsors is still in the House Judiciary Committee.

The Senate version, introduced by U.S. Sen. Jon Kyl, an Arizona Republican, has been referred to the Committee on Banking, Housing, and Urban Affairs.

A third measure, House bill 1223, introduced by U.S. Rep. John Conyers, a Michigan Democrat, would set up a committee to study Internet gambling. The U.S. Justice Department, which opposes Internet gambling, said it believes that the committee would likely find in favor of legalizing some form of Internet wagering.

The U.S. General Accounting Office estimates that some 1,800 offshore gambling operations exist and that they take in about $4.2 billion a year, some 50 to 70 percent coming from U.S. bettors.

A federal appeals court in New York already has determined that an offshore operation that took wagers from U.S. citizens calling from a state in which gambling was illegal had committed a federal crime. Internet gambling already is illegal in the United States, but the difficulty is in enforcement against offshore operators who are legal in their own country.

Some 11 U.S. states permit some form of physical gambling, and Nevada has passed a law for Internet gambling, but the rules are not yet in place.

The current federal push comes after an effort by New York Attorney General Elliot Spitzer to prevent major credit card companies headquartered there from sending money to gaming operations overseas. Major credit card companies now decline to make payments to known gambling operations. Two of the federal laws, if passed, would extend this prohibition through the whole country. The bills also would prevent wire transfers, check cashing and other methods that gamblers use to make payments.

The Bush administration effort is being led by U.S. Attorney General John Ashcroft. As a U.S. senator, he co-sponsored anti-Internet gambling legislation in 1997.

Costa Rica employs thousands in the online gambling and sportsbook operations. A further constriction of the payment mechanisms would have a negative effect.

"Offshore Internet gambling could not attract U.S. customers without making use of our payments system," said U.S. Sen. Paul Sarbanes, a Maryland Democrat, at a hearing of the Senate Banking Committee. "Every Internet gambler must use a credit card, fund transfer, or bank instrument to open and fund an account from which to gamble on a web site."

John G. Malcolm, a deputy U.S. attorney, gave his summary of the evils of online gambling to the House Subcommittee on Crime, Terrorism, and Homeland Security Committee April 29.

He said Internet gambling is open to minors and compulsive personalities and there is a high potential for fraud. Not only do some Internet operations refuse to pay and cheat with the odds, they are not stable, said Malcolm.

"Like scam telemarketing operations, on-line gambling establishments appear and disappear with regularity, collecting from losers and not paying winners, and with little fear of being apprehended and prosecuted," he told the committee.

Because criminals are well aware of the fact that banks are now subject to greater scrutiny and regulation, they have — not surprisingly — turned to other non-bank financial institutions to launder their money," said Malcolm. "Online casinos are a particularly inviting target because, in addition to using the gambling that online casinos offer as a way to hide or transfer money, online casinos offer a broad array of financial services to their customers, such as providing credit accounts, fund transmittal services, check cashing services, and currency exchange services."

The anti-gambling legislation is not without opponents. Internet providers are not anxious to assume a policing responsibility. And conservatives generally support a citizen’s right to spend money without government interference.

Said the conservative Cato Institute’s Clyde Wayne Crews Jr.:

"Only some gambling is bad, apparently. One gets the impression that the real motive of anti-gambling legislation isn't protecting against crime or protecting vulnerable individuals against the unscrupulous, but the desire to legislate behavior and control others. But it's not the job of politicians to hector constituents about morality or finances."

Ironically, if the federal government ends up approving Internet gambling as a result of the proposed year-long study by a congressional committee, the effect here also would be negative. Gambling powerhouses in the United States would gear up with promotional efforts in direct competition with offshore operators.